CFTC Sues Wisconsin as Federal Fight Over Prediction Markets Jurisdiction Widens

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The U.S. Commodity Futures Trading Commission (CFTC) has sued Wisconsin in federal court, adding the state to a growing list of jurisdictions the agency is challenging as it asserts exclusive authority over prediction markets.

The suit follows Wisconsin’s own lawsuit last week against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com for allegedly operating unlicensed gambling platforms in the state.

CFTC Chairman Warns States: “We Will Sue You” Over Prediction Markets Interference

Chairman Mike Selig filed the complaint in the U.S. District Court for the Eastern District of Wisconsin, arguing that event contracts traded on platforms such as Kalshi and Crypto.com are derivatives that fall under the CFTC’s exclusive federal jurisdiction rather than state gaming law. Selig framed the lawsuit as a direct warning to states.

“[…] if you interfere with the operation of federal law in regulating financial markets, we will sue you,” he said.

Selig is currently the sole sitting member of what is designed to be a five-member commission, giving him unilateral control over the agency’s enforcement and litigation decisions.

Wisconsin Sued Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com Days Earlier

Wisconsin filed suit last week against Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com, accusing them of running unlicensed gambling operations in the state. The complaint echoed claims other states have made against the same platforms, treating prediction market contracts as wagers rather than regulated derivatives.

The CFTC’s response came within days. The agency’s position is that event contracts are an emerging form of derivatives activity that has been within its regulatory scope for decades and that state gambling statutes cannot override federal law governing futures and derivatives markets.

CFTC Has Sued New York, Arizona, Illinois, Connecticut, and Now Wisconsin

Wisconsin joins New York, Arizona, Illinois, and Connecticut on the list of states the CFTC has sued in its campaign to establish federal preemption over prediction markets. The pattern has been consistent: a state moves against prediction market operators under gambling law, and the CFTC responds with a federal suit asserting its own jurisdiction.

New York sued Coinbase and Gemini over their prediction markets businesses last week. The CFTC filed against the state days later. In Arizona, a federal judge earlier this month paused the state’s criminal prosecution of Kalshi, finding that the CFTC is likely to succeed in arguing that federal law preempts state gambling statutes.

That Arizona ruling is the strongest early signal on the legal merits. If the preemption argument holds across jurisdictions, states would lose the ability to prosecute prediction market platforms under gaming law, leaving the CFTC as the primary regulator of the sector.

The Outcome Determines Whether Prediction Markets Answer to the CFTC or 50 States

The outcome of these cases will determine whether prediction markets operate under a single federal derivatives framework or face a patchwork of state gambling regulations. Platforms including Kalshi, Polymarket, and Crypto.com have built their businesses on the assumption that event contracts are CFTC-regulated derivatives, not state-licensed gambling products.

The CFTC’s litigation blitz under Selig has been unusually aggressive for an agency that historically moved more slowly on jurisdictional disputes. With suits now filed against five states and a favorable early ruling in Arizona, the agency is building a case record that could settle the question before Congress acts on prediction markets legislation of its own.